Short Put Ladder
Description
The inverse of the long put ladder: selling a higher put and buying one put at each of two lower strikes, for a trader positioned for either a flat/up market or a large decline.
Setup
- Sell one put at a higher strike.
- Buy one put at a middle strike.
- Buy one put at a lower strike, same expiry.
Context
Used when the underlying is expected either to stay quiet above the higher strike or to sell off hard through all three strikes, with the middle zone being the trade's weak spot.
Risk Profile
Maximum loss sits between the middle and lowest strike. Above the higher strike the position keeps its net credit; below the lowest strike, gain grows as the underlying keeps falling, bounded only by zero.
Pros
- Large gain potential on a big decline.
- Can be set up for a net credit.
- Profits if the underlying stays quiet above the higher strike too.
Cons
- Loses money in the middle zone between the second and third strikes.
- Three legs means more commissions and more to manage.
Effect of Time
Time decay generally hurts the position while the underlying sits in the loss zone.
Effect of Volatility
A rise in implied volatility generally helps the position, since the long puts outnumber the short put.
Look-Alike Strategies
Live Structure
| Position | Right | Ratio | Strike | Expiry | Premium | Fill Price | Est. Fee |
|---|---|---|---|---|---|---|---|
| Short | Put | 1 | $85000.0000 | 24 Sep 2026 | $633.1167 | $506.4934 | $25.3247 |
| Long | Put | 1 | $84500.0000 | 24 Sep 2026 | $282.7921 | $312.3376 | $25.3247 |
| Long | Put | 1 | $84000.0000 | 24 Sep 2026 | $101.2987 | $118.1818 | $12.6623 |
Estimated Cost to Assemble
An estimate of what entering this structure right now would really cost: filling every leg by crossing the spread (the ask when buying, the bid when selling) instead of at the mid-price, plus an estimated exchange fee. Real fees and fills can differ from this estimate.
Payoff & Greeks vs. Underlying Price
The Greeks curves are a Black-Scholes model using each leg's current implied volatility, holding time to expiry fixed -- not live exchange data at every price, which only exists at the current price (dashed line).
Payoff at Expiration
This structure's value and profit/loss at expiration, at a handful of specific prices: every leg's strike, every breakeven, the current spot, and the chart's own range.
| Underlying Price | Value at Expiration | Profit / Loss | Return on Cost |
|---|---|---|---|
| $83000.0000 | $500.0000 | $749.0259 | +300.8% |
| $83749.0259 breakeven | -$249.0259 | $0.0000 | +0.0% |
| $84000.0000 | -$500.0000 | -$250.9741 | -100.8% |
| $84415.5600 current | -$500.0000 | -$250.9741 | -100.8% |
| $84500.0000 | -$500.0000 | -$250.9741 | -100.8% |
| $84750.9741 breakeven | -$249.0259 | $0.0000 | +0.0% |
| $85000.0000 | $0.0000 | $249.0259 | +100.0% |
| $86000.0000 | $0.0000 | $249.0259 | +100.0% |